Systems engineering processes coordinate the efforts of many individuals to design a complex system. However, the goals of the involved individuals do not necessarily align with the system-level goals. Everyone, including managers, systems engineers, subsystem engineers, component designers, and contractors, is self-interested. It is not currently understood how this discrepancy between organizational and personal goals affects the outcome of complex systems engineering processes. To answer this question, we need a systems engineering theory that accounts for human behavior. Such a theory can be ideally expressed as a dynamic hierarchical network game of incomplete information. The nodes of this network represent individual agents and the edges the transfer of information and incentives. All agents decide independently on how much effort they should devote to a delegated task by maximizing their expected utility; the expectation is over their beliefs about the actions of all other individuals and the moves of nature. An essential component of such a model is the quality function, defined as the map between an agent’s effort and the quality of their job outcome. In the economics literature, the quality function is assumed to be a linear function of effort with additive Gaussian noise. This simplistic assumption ignores two critical factors relevant to systems engineering: (1) the complexity of the design task, and (2) the problem-solving skills of the agent. Systems engineers establish their beliefs about these two factors through years of job experience. In this paper, we encode these beliefs in clear mathematical statements about the form of the quality function. Our approach proceeds in two steps: (1) we construct a generative stochastic model of the delegated task, and (2) we develop a reduced order representation suitable for use in a more extensive game-theoretic model of a systems engineering process. Focusing on the early design stages of a systems engineering process, we model the design task as a function maximization problem and, thus, we associate the systems engineer’s beliefs about the complexity of the task with their beliefs about the complexity of the function being maximized. Furthermore, we associate an agent’s problem solving-skills with the strategy they use to solve the underlying function maximization problem. We identify two agent types: “naïve” (follows a random search strategy) and “skillful” (follows a Bayesian global optimization strategy). Through an extensive simulation study, we show that the assumption of the linear quality function is only valid for small effort levels. In general, the quality function is an increasing, concave function with derivative and curvature that depend on the problem complexity and agent’s skills.
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Toward a Theory of Systems Engineering Processes: A Principal–Agent Model of a One-Shot, Shallow Process
Systems engineering processes (SEPs) coordinate the effort of different individuals to generate a product satisfying certain requirements. As the involved engineers are self-interested agents, the goals at different levels of the systems engineering hierarchy may deviate from the system-level goals, which may cause budget and schedule overruns. Therefore, there is a need of a systems engineering theory that accounts for the human behavior in systems design. As experience in the physical sciences shows, a lot of knowledge can be generated by studying simple hypothetical scenarios, which nevertheless retain some aspects of the original problem. To this end, the objective of this article is to study the simplest conceivable SEP, a principalagent model of a one-shot, shallow SEP. We assume that the systems engineer (SE) maximizes the expected utility of the system, while the subsystem engineers (sSE) seek to maximize their expected utilities. Furthermore, the SE is unable to monitor the effort of the sSE and may not have complete information about their types. However, the SE can incentivize the sSE by proposing specific contracts. To obtain an optimal incentive, we pose and solve numerically a bilevel optimization problem. Through extensive simulations, we study the optimal incentives arising from different system-level value functions under various combinations of effort costs, problem-solving skills, and task complexities. Our numerical examples show that, the passed-down requirements to the agents increase as the task complexity and uncertainty grow and they decrease with increasing the agents' costs.
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- Award ID(s):
- 1728165
- NSF-PAR ID:
- 10174145
- Date Published:
- Journal Name:
- IEEE Systems Journal
- ISSN:
- 1932-8184
- Page Range / eLocation ID:
- 1 to 12
- Format(s):
- Medium: X
- Sponsoring Org:
- National Science Foundation
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- Free Publicly Accessible Full Text
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Accepted Manuscript1.0
- Journal Article:
- https://doi.org/10.1109/JSYST.2020.2964668
